Re Lewis

[1994] QLC 42

[1994] QLC 42

 

  LAND COURT

BRISBANE

12 August, 1994

Re:     Determination of unimproved value
  for freeholding purposes -
  SL 31/43697 - Maryborough District.

Lessee:  Sheila Lewis

LAND ACT 1962.

D E C I S I O N

An application to convert to freehold tenure the land contained within Special Lease 31/43697 was received by the Minister on 25 November, 1992.  The application was duly considered and it was recommended that the lessee be permitted to freehold an area of about 11.3 hectares of the leased land.  The matter before the Court is the determination of the purchasing price, it being contended by the lessee and through her valuer, Mr DG Cupitt, that as the relevant land is unsurveyed the purchase price should take into account the costs of survey of the land - a survey being a necessary pre-requisite to the grant of a freehold title.  In the opinion of the Department of Lands, the purchase price must be found on the assumption that the land is fee simple land and accordingly surveyed land.
           The lease is over land described as Lot 112 on Plan CK 3559, parish Walsh, containing an area of 82.5 hectares.  The land is situated about 12 kilometres north of Torbanlea.  The Hervey Bay - Burrum Heads road severs the lot.  The southern severance of the lot has access from Beelbi Creek Road on the south-eastern boundary.  There is also a road along the south-western boundary of this area but it is unformed.  A plan of the leased area is attached as Annexure A.  The application to freehold was approved in respect of the southern triangular severance.  Mr Cupitt who gave evidence of value on behalf of the lessee agrees with Mr Gaedtke, registered valuer in the employ of the Department of Lands, that the highest and best use of the parcel is as a rural residential site.  In his opinion a logical homesite exists in the southern section near the Beelbi Creek Road from which access and services would be obtained.  In arriving at an unimproved value of $40,000 (exclusive of survey costs) he had regard to sales of rural residential sites.  Mr Gaedtke, by using sales of land for similar use, derived a value of $45,000 as surveyed land.  The issue is thus whether the purchasing price should take into account cost of surveys which the lessee must obtain and register before purchase.
           The lease was issued for Business (Rural Activities) purposes.  The lease is for a term of 20 years from 1 June, 1981, and among other things contains a condition that -

"The lessees shall pay the cost of any required survey of the leased land."

Provisions of the Land Act 1962 (the Act) governing the freeholding of special leases are found in Division 2 of Part 8 - Section 207 and following.  The Act makes specific provision covering surveyed land and unsurveyed land.  If a survey is required the Minister may make a conditional offer to sell at a purchasing price specified in the offer and subject to the condition that the "lessee, at the lessee's expense, is to have the necessary survey made and a plan of survey deposited." s.207(G).  Under s. 207(I), no payment of purchase money is to be made until survey has been effected.  That section also provides that instead of accepting the offer the lessee may request the Minister to refer to the Court for determination the purchasing price of the land.  This course of action was taken by the lessee in this case.  The purchasing price is to be determined in accordance with the requirements of s.207(D).  The Court is required to determine insofar as is relevant in this case "the unimproved value of the lease at the day the Minister received the application" sub-s. 5.  The words "unimproved value of the lease" are defined in sub-s.7 as follows:

"(a)the unimproved value of a lease is the amount that in the Minister's opinion or, if the Minister has referred the matter to the Court, the Court's opinion, experienced persons would be willing to pay for an estate in fee simple in the land if it was offered for sale on the reasonable terms and conditions a bona fide seller would require; and     "

The assumption to be made calls for a valuation based on what the land would fetch "for an estate in fee simple".  As an estate in fee simple cannot be obtained without survey such purchasing price must be fixed on the assumption that the parcel is surveyed land.  There is no dispute that as a separate surveyed parcel the relevant land would fetch $45,000 unimproved in the market place at the date of valuation.  The lessee is of the opinion that the test of value is harsh.  However, it is to be noted that the lease states that costs of any necessary survey shall be borne by the lessee.  In fact I find it hard to imagine any instance where a survey would be necessary other than for purposes like the present.  In a general sense I would be inclined to think that any prudent owner in the marketplace if approached by a person seeking to purchase part of his landholding would not only price the lot to be sold for its highest and best use when subdivided, for example as a rural residential site, but would also make the sale subject to the purchaser paying all relevant costs including survey costs.  In this particular case the evidence is that the northern part of the lease (over which freeholding has been refused) will on expiry of the lease be reserved for environmental park (or like) purposes.  Mr Cupitt said that the cost of survey of the parcel to be freeholded would be of the order of $2,000.  As it stands at present the northern area could be used until expiry of the lease for grazing a few horses or cattle in conjunction with the area to be freeholded.  If the lessee is minded so to do, she may explore with the Department the possibility of surrender of the northern area (to be effected in conjunction with the freeholding application) in consideration for the Department bearing costs of survey of the southern area.  Such a course of action would allow for settling the issue now and adding to the land bank of the Department of Environment and Heritage at little cost.
           I determine the unimproved value of the area the subject of the reference to the Court in the sum of Forty-five thousand dollars ($45,000).

President of the Land Court